5 Ways to Insure that your Rental Property Doesn’t Rent

Rental Property SignAs a landlord you are super busy, so neglecting your rental property is easy to do. When your tenant vacates, you want to fill the vacancy as soon as possible. Balancing you time and money with the necessity for a quick turnaround is tough. At the same time, you want to insure that you get a great, long-term tenant. Of course screening and asking the right questions is very, very important, but the condition of your property will also attract the right clientele. What a dilemma! Too many landlords neglect simple things to get their rental property in rent-ready condition. Here a list in the WRONG things to do.

Mistake #1: Ignore Internet reviews

“They don’t really pay attention nowadays, there are so many reviews” you might think. Wrong. Reviews are as important as ever, and they are shared among your potential tenants. Respond to them, and contest those that might come from your competitors.

Mistake #2: Don’t bother painting

Painting is cost effective and makes a HUGE difference. It covers up holes in the walls, and can make your rental property feel inviting and comforting with the right colors. Neutral colors with bright accents work well.

Luxury Bathroom

Mistake #3: Bathroom upgrading is too messy

Oh yeah? Well, consider that the tenant is paying close attention to the bathroom. They don’t want to have to deal with leaky showers, toilets, or sinks. The bathrooms should ‘smell’ fresh and clean, and should have good lighting (NOT florescent bulbs). If you don’t need to replace faucets, be sure they are very clean and shiny! An electric scented candle is a really nice touch.

modern kitchen

Mistake #4: Ignoring the all important kitchen

Like the bathroom, tenants often make decisions based on the kitchen. If your appliances are up to date, consider easy repairs such as staining the cabinets, replacing knobs, or adding new flooring. You can sometimes add new flooring on top of the existing flooring at a more reasonable cost. Be sure that the inside of the stove is very clean, as well as the inside of the refrigerator. If those are dirty, that can really turn off a prospective tenant.

Mistake #5: Don’t bother with ‘staging’

Not sure what that means? Staging is attention to the little things that make your rental ‘earthy’ and aesthetically appealing. For a small investment, you can purchase some paintings to match your wall coloring, put area rugs in strategic places, and put pillows or throws in the right spots. Don’t forget that mirrors make the room look bigger, so add mirrors in the kitchen, bedrooms and other choice locations. Go to Pinterest for ideas.

signing rental property contract

Mistake #6: Don’t consider first impressions

When a prospective renter pulls up to your property, you should catch their eye right away. Isn’t that important when you first meet someone in person? You should dress nicely and professionally when meeting a tenant. Your property should give a first impression as well. Have a welcome mat outside the door, and make sure the door is painted and has polished hardware.  If an outdoor grill is visible, it will impress, and so will on outdoor chair or lounger.

Mistake #7: Don’t waste your time pampering

If you just consider your tenants as money generators, you are probably not a good landlord. They are people that want to start the next chapter of their lives in your dwelling. Make them feel at home by offering a welcome package, possibly with some snacks or chocolates and a bottle of wine. They will appreciate if you have a community newspaper, or some local guides that include local restaurants, nightclubs, and gyms. While you are at it, be sure to offer some incentives for your tenants to pay their rent in a timely manner and give them your contact info right away.

beautiful rental home interior

Mistake #8: Just use your previous photos

As you follow the previous advice, don’t forget to take new photos of your beautiful property. Now is the time. Use a high quality camera or cell phone and upload as large of an image as possible. Be sure to include all living areas, the kitchen, bathrooms, and storage areas. DO NOT include people, animals, or areas with bad lighting. You want to make your rental bright and inviting.

Ok, so all this may not be easy. But realize that you will get a return any time you improve your rental property, and you will fill you vacancies faster when your property makes a great first impression. And you will feel good knowing that you are being a good landlord that tenants will want to stay with.

Property Management Company vs. DIY Landlording

Rental Property InvestmentFor a business to be successful, there are a number of questions that you need to ask yourself. Therefore, as a property owner in the real estate business, one of the questions you will need to answer is whether to hire a property management firm or become the landlord and oversee your investment in person. It is an important decision that requires careful considerations for each strategy has both the negative and positive factors as well as the associated cost.

Despite the fact that you have options at your disposal, first things first. As a rental property owner, one of the critical and meaningful decisions you make is to identify and measure the advantages and disadvantages of each path. For sure, managing a rental property on your own can be very financially rewarding, but it comes with a lot of commitments in terms of time and effort. Conversely, hiring a property management company not only brings about a reduction in the day to day responsibility but also gives you more time to relax and engage in other activities. However, that freedom comes at a cost that can have a long term impact on your bottom line. In order to understand your options, we break down the strengths and weakness of each endeavor.

Becoming a Landlord

When you decide to manage your rental property in person, then you become your own investment property’s gatekeeper. More so, you have a responsibility to both your tenants and your rental business. Therefore, it is your job to ensure that the tenants’ expectations are met and also to make sure that operations run smoothly. You also have to ensure that your mortgage gets paid. The duties of a landlord include but not limited to finding new tenants and collecting rent as well as maintaining a clean environment.

Benefits of Self-Managing Your Property

 Save on Management Fees

No single management company works for free. They charge a fee for their services. Sometimes, the fee is as high as 10% to 15% of the collected monthly rent. However, when you choose to manage your property, you will keep 100% profits of your property. For example, if your property net worth is $20000, the property management company will take $2000.

Direct involvement in day-to-day activities and decisions

When you manage your own property, you will have the power to make all the important decisions without consulting someone else. More so, you will have total control over a number of issues that include where to advertise your vacant rentals as well as which contractors to hire for maintenance purposes. Nevertheless, you will also know how to collect rent from each tenant individually.

Cons of Self-Managing Your Property

Finding tenants

It is up to you as a manager to fill the void once your property becomes vacant. Typically, this is the most time-consuming and the hardest part of managing your own property. Therefore, you have to do marketing and advertising in order to attract tenants. Nonetheless, you have a duty to screen new tenants to ensure that you are leasing the property to the right persons. In addition, you have to collect the deposits from new tenants.

Legal issues

Since you manage you own property, you must know all the property laws so that you can know your stand when it comes to late payment and eviction.
Property Management Installing a light

Maintenance and repair

You are in charge of answering the maintenance calls as well as making sure that repairs are fixed. These are things you can do personally if you are the handyman type. Alternatively, you can hire contractors to make repairs but this will, of course, cost money.

Rental property management

Even though you can manage your own property, sometimes in business, it is better to pay a professional to do it for you In fact; a property management company adds a significant value to your investments as they deal directly with prospects and tenants. The property management company will save you considerable amounts of stress and also give you peace of mind for you know that the business is running smoothly.

Pros of a Property Management Company

Minimal vacancies

The property management company will aggressively advertise your property across a number of major platforms. This way, the vacant will reach the widest tenant pool possible. Therefore, the property will attract top-notch tenants that are likely to stay for long and pay on time as well as those that will take good care of your property.

Time-saving ability

Time-saving ability is one of the most crucial advantages of hiring a property management company. It will free up some time for you to do things you enjoy and especially when you have multiple investment properties. More so, with the property management company, you will not be responsible for the late night emergency repairs and annual inspections.

Fewer legal problems

A good property management company is well equipped with the landlord-tenant laws and will ensure that you are not vulnerable to potential law suits by undertaking stringent screening processes.

Tighter rent collection processes

Landlords can be lenient to tenants when it comes to rent collection. Timely rent collection is the only way to maintain cash flow. Therefore, your tenants should know that rent paying is not negotiable. By hiring a property management company, you put a buffer between you and your tenants for they will be involved in chasing down rents and even eviction when necessary.

Fluid infrastructures

Mostly, property management companies come as an all in one management package. These companies have standard procedures that ensure the leasing process goes smoothly in all stages. The procedures include screening and rent collection as well as eviction of tenants.

Cons of Hiring a Property Management Company

The only disadvantage of hiring a property management company is its higher cost that ultimately affects your profit margin. Most often, the company will take all or part of the 1st month’s rent as the first payment and then approximately 10% of each and every month’s rent after that. The company will use this first month’s rent for a number of expenses such as advertising the property and processing the applicant as well as administrative costs that come with setting up a new account.

Conclusion

So, if you have the time and are willing to learn all aspects of the property management business the DIY landlord option might work best for you. If you are expecting to keep purchasing rental property as an investment, you might want to start your own management business and hire your own personnel. However, it is a lot of work and mistakes can become very costly. You will have to learn about maintenance, find and purchase property management software, learn about the legal aspects of rental management, screen and work directly with your tenants.

If you can find a good property management company to work with, you will probably find that their experience and knowledge will be worth the time savings for you. You will be up and running in a short time and able to focus on new opportunities for investing.

10 Features Your Property Management Software Should Have

property management chartEven if you are an owner of a single duplex, you should have good property management software. This especially rings true if you are a professional property management company managing for a number of rental property owners. There are so many choices, and many of them are very good, but most likely none of them will have every single feature that you might want to have in your property management software.

The initial decision is whether you want web-based Internet software or desktop-based on-premise software. This article is not going to get into the pros and cons of either. The 10 features mentioned should be present in any decision that you make. However, you will need to consider if you want to have an unending monthly payment to use software online (web based), or if you would rather purchase your software once and own it yourself for as long as you need it (desktop based).

#1. Ease of Use – What good is software that is confusing and difficult to use? Generally, I have found that software created by programmers doesn’t ‘think’ the way property managers think. The software companies founded by actual realtors and rental property managers seem to be the most user friendly with the best flow. So when you are looking at software, be sure to see how easy it is to look up a tenant by their name, by the rental address, or by the owner of the property. Also make sure that the accounting for that tenant is not far away, meaning that it takes more than one click to access the accounting once you have displayed the tenant info.

#2. Separation of Accounts – You are managing two entities, so you will need to provide separate accounting and reporting for each. First, you are managing the tenant, so you’ll need accounting for the rent charges, rent receipts, tenant expenses and more. Your software program should provide statements clearly showing the charges and income that you receive from the tenant. Secondly, you are managing the accounting for the owner of the property. So, you will need to maintain accounting showing the rent received, management fees (if applicable), repairs and maintenance and other charges. Then, it should be able to provide reporting for the owner that is easy to understand.

#3. Notices and Invoices – You need to stay on top of money due from your tenants. So, your software should be able to easily send ‘Payment Due’ invoices’ and ‘Late Rent’ notices. Be sure that you test this out and see how easy it is to use. Since you may want to use your own wording in the notice, make sure the wording is not ‘canned’ in order for you to create a customized notice.

#4. Easy Date-Sensitive Reporting – Running a report shouldn’t be difficult. Basically, you should be able to click on a report and set the date range. A good property management report will be easy to understand, show totals at the end of the report, and allow you to run the report for any date range, including weekly, monthly, quarterly, or yearly.

#5. A Good Vendor File – Vendors are a big part of your business. They repair your rental property and provide goods that you need to maintain their condition. Vendors might be general contractors, handymen, insurance companies, building supply companies, mortgage companies, utilities, or landscapers. So, your software should have a vendor section with unlimited vendors and keep plenty of information on each vendor. You should look for a property management system that includes the vendor name, contact information, phone numbers, email, tax ID numbers, addresses, and plenty of note space for each vendor. Additionally, the program should be able to insert any vendor into any check.

#6. A Reminder System – When you are juggling tenants, owners, and your own business needs, you can’t remember everything. Let your software do it for you. A good rental property software should have a comprehensive reminder system built-in to the product. Tenants are constantly calling with questions, maintenance requests, and possibly complaints about other tenants. If your software has a reminder system, you can immediately log the call and set a future date to take action if necessary. Additionally, the reminder system should be able to remind you of tenants with outstanding balances, lease expiration dates that are approaching, owners that owe you money, and more. Use the reminder for PR as well by putting in reminders for tenant and owner birthdays, and send them well wishes. Be sure to insist on a robust reminder system in your software.

#7. Checks and Deposits – Be sure that it is easy to create checks and deposits. A good software for a property manager should include a check register with reconciliation features and the ability to sort by check number, date, payee, and amount. A single check should be able to be posted to multiple rental properties, such as a check for a vendor that works on multiple units.

#8. Emailing Features – While your software should include the ability to print reports, it should also be able to email to your tenants, owners, and vendors. I’d suggest that it be able to keep two email addresses for each, and have the ability to create and save emails. The email should also have the ability to send attachments, because you might want to include an invoice or receipt with your email.

#9. Paying Owners – At the end of the month, you’ll need to send your owners a check for their net income received. Your software should be able to create owner checks with only one or two clicks, saving you the time needed to write a check yourself. If you prefer not to mail checks, your software should have the ability to send payments to your owners via ACH to their bank account. Typically this will be a small additional fee, but it is well worth it.

#10. Backup Features – Few things are as heart-breaking for a business owner as finding out that their data has been lost. Backups are critical. If you have web-based software, you should not depend upon someone else to do it for you, no matter how safe or redundant they claim their servers are. With desktop software, it is easier to make local copies of your data, but you have to remember to do it. Be sure your software has a ‘reminder’ for your backups, and do it on a regular basis. The better software will be able to backup to any drive, such as a memory stick, flash drive, or network server.

Choosing the right property management software can be daunting, but if you know what to look for, you will quickly narrow down the choices. Be sure that you are able to download a ‘Sample Program’ allowing you to try out the software prior to the purchase. Look for a company that has been in business for at least 10 years and has a track record. Of course, look at online reviews, but be aware that reviews are sometimes written by the competition, so there is no alternative to actually trying out the software yourself and talking to a knowledgeable representative of the company. If you cannot speak to someone in person via a toll free number, you should be wary of their support down the road. Even if the software is easy to use, you should insist on a company that provides free phone support to help you get started, and has a plan for support after that. Too many companies leave you high and dry after you make the purchase.

I hope these suggestions are helpful to you! Please let me know if you have any follow up questions!

About the author:
Wayne Gathright is the founder and primary coder of the Tenant File Property Management Software company. He has been in the real estate and property management business for over 20 years. Other products created by Wayne are a Work Order Program, Work Processor for Property Managers, Tax Software, and an eBook “What ALL Landlords REALLY Need to KNOW”.

Hurricane Harvey – Our thoughts for landlords

HurricaneHarveySatellite-NASA
Photo credit: NASA

Hurricane Harvey in Texas has been catastrophic in so many ways and has affected millions of lives. I know because many of us at Tenant File are from that area and have friends and relatives living there.  Though the Tenant File headquarters is in Austin Texas, which was spared much of the fury, our friends to the south weren’t so lucky. Our best wishes and prayers go out to all of those affected as many of them are still going through rough times at the time of this writing.

Personally, my parents live in Victoria. Hurricane Harvey crept in to Texas around Rockport, which was devastated. Victoria is only 29 miles from the coast, and that is where Harvey parked itself for 3 days. Both my parents live in an assisted living facility, and we got word on Thursday night that they had a mandatory evacuation by 9:00 am the next morning. They told everyone in Victoria they had to get out. The city has around 80,000 residents, so you can imagine the panic and confusion.

The only place to go was my sister’s farmhouse 10 miles away, but my 87 year old mother passed out getting in the car and had to be rushed to the hospital in Victoria. She rode out the unrelenting lashing in the hospital with my sister, and my 92 year old dad hunkered down at the wood frame farmhouse. It was hit with the fury of Harvey but the 100 year old house withstood the winds and torrential rain. After the second night, they had to evacuate my mother from the Victoria hospital, because the hospital was filling up with critical patients. So my mother went to San Antonio. My father had been without electricity since the storm hit. Power came on Monday night for them, but many residents in Victoria are still without power now.

HurricaneHarvey-Boatdock-AdreesLatif-Reuters-50
Photo credit: AdreesLatif-Reuters

The point is, you never know what is going to happen. It could be a hurricane, a flood, earthquake, terrorist attack, fire, burglary or whatever … so you have to be prepared.  If you are a landlord, you are in charge of protecting your property but you also have a responsibility to your tenants. Of course there are legal responsibilities, such as providing a safe and habitable environment for them. But I’m talking about moral responsibilities. Is there a tree leaning over the rental, such as a Chinaberry tree that has a shallow root system? That is dangerous for both your tenants and your property, so you should deal with that before the worst happens.  Is it near a creek or in a low-lying area prone to flooding? Maybe you should consider barriers or improve the landscaping to handle the runoff. Are there loose shingles, siding, or stacks of lumber or other items that could become a hazard in high wind?  Fix it, or get rid of it. Do you have an evacuation plan or a means to contact your tenants quickly? Get one. Can your tenants get in touch with you if they have to leave quickly and need to know the status of their home? Be sure they have the information they need, by sending them a text or email explaining the situation, and keeping them updated on a regular basis. Let them know that you care.

HurricaneHarvey-AP
Photo credit: AP

Also, you should require renters insurance for your tenants. While the structure of your building has to be insured, many tenants mistakenly think that their own belongings are covered through your insurance. It is up to you, the landlord, to let them know that it is mandatory (or should be) that they get renters insurance for themselves. It is affordable and can be tailored to cover their pets, liability for visitors, theft, fire and natural disasters.

HurricaneHarvey-MarkRalstonAFP-50 Getty
MarkRalstonAF-Getty

And of course, don’t neglect getting insurance for your own property! That can certainly put you in legal jeopardy. A friend of mine knows a tenant in Houston that evacuated. Her rental home exploded because of a gas leak caused by Hurricane Harvey. The house burned down, but thank God she had already left. The landlord did not have insurance on the house, nor did it pass the compliance protocol for gas burners.  Image if that was your rental home… this will probably be a nightmare for the landlord as well as the tenant. And to think, what if the tenant didn’t leave in time? There is no excuse for neglecting your rental property, for your own sake, and morally for the sake of your tenant.

I guess the best thing to do is to put yourself in the shoes of your tenants, and think about what you would need if a disaster strikes. Then don’t put it off, because you never know what will happen and it might be too late later on. Fortunately, my parents are ok, but it could have been much worse. For millions of people in Houston, Galveston, Port Lavaca, Rockport, Port Aransas and hundreds of other cities along the coast and inland river ways, this is a nightmare coming true. Please provide whatever help that you can!

About the author: Wayne Gathright is the president of the Tenant File Property Management Software company. For more information, visit http://www.TenantFile.com.

Why Your Tenants Need Renters Insurance

Renters Insurance SalesmanMany landlords are now requiring that their tenants have renters insurance. If you are not one of them, you should consider the benefits for both you as the property manager (or owner) and for the tenant. This comprehensive article was created to help you make an informed decision about renters insurance for your tenants, and to provide some concrete advice about how to approach the subject and execute the plan.

The first thing to consider is whether or not you can ‘required’ you tenants to have it. Generally, but with exceptions, you are free to put a requirement in your lease saying that in order to rent from you, they must get renter’s insurance. You add other provisions such as quiet enjoyment and use of the facilities, so this is just another clause. There are a few exceptions, so you need to be aware of the regulations in the agreements you sign for subsidized housing and your local and state regulations. If you don’t currently require renter’s insurance, you can add that provision to your lease for new renters, and for existing tenants, you can sign a mutual agreement that is amended to your current lease. All of my daughter’s leases had that provision, including the amount required and that the ‘additional interest’ was to be the apartment complex management. In searching for insurance, I found that it really isn’t that expensive unless you (like any insurance) choose a low deductible and add optional c overages. More on that later.   Read the FULL ARTICLE

The Ultimate Guide to Keeping Your Tenants Happy

Tenant and Landlord Marriage

“With this lease contract, I thee wed”

It’s a marriage between the tenants and the landlord . . . and everything is wonderful! The tenants are so excited to have a new place to live. Decorating is exciting, there are new things to buy, parties to plan, a shorter commute to work, and anticipation is in the air. The landlord is happy, too… finally the money will start coming in again, no more advertising costs and … wait, did I hear the tenant say “parties to plan”?

That’s just life, and part of the things that both landlord and tenants have to deal with in the complex landlord – tenant relationship. Right, life happens, and landlords need to realize that there WILL be bumps in the road. Will you drive fast over the bumps and damage your car, possibly losing control? Or will you carefully maneuver around those bumps, saving your car and your piece of mind?

Tenant Landlord Potholes

Or is there an ‘out-of-the-box’ solution? Maybe, just maybe you can get the tenant to ‘fill in’ those bumps for you? Crazy? Not really, and this guide will give you some ideas on how you can work with your tenant to fill in the potholes of your long-term relationship.

I’m talking about ‘incentives’. Ways that you can work with your tenants to make sure that your rent is paid on time, that your tenants are happy with you as their landlord, and that your valuable assets are protected at the same time.

First, look at your tenants as ‘people’. Sounds silly, right? But many landlords just view their renters as money machines that only call them when they want something from you. Guess what? If that is your viewpoint, you are probably an unsuccessful landlord. You may get by with putting off a repair for a while, but then again your tenants may build resentment, damage your property, leave you, and then post a bad review on social media. Should you care? Of course, you should. Besides all of the expenses you will bear, you’ll soon be advertising for new tenants, and it will be even harder because like it or not, most tenants nowadays really will check for reviews about you on social media. If this sounds like tough love, maybe it is …your reputation matters.

Back to the wedding – what is the best way to have a marriage that lasts? Answer: Have a couple that knows each other well and accepts them way they are. In a relationship, that is by taking the time to develop love and understanding of one another. No, I’m not suggesting that you date your tenants – I’m saying that you need to do background checks! As a landlord, you need to know your tenants thoroughly by examining their credit history, employment history, rental history, criminal offenses, evictions and more. Hmmm, maybe that would also prevent some bad marriages too, but I digress. If you don’t do your homework at the beginning, it may not even matter if you take some of the other incentive steps I’ll mention later on.

 Get to know your partner

Tenant and Landlord Shaking Hands

The tenant usually pays for the background check, so failure to get one is like tossing a coin between getting a bad tenant or a good one. This is THE most important first step!

  • Verify that your tenant can pay the rent. That is spelled ‘J.O.B.’. Even if they do have a job that covers the rent you need to be sure that it can also cover all of the credit card debt (think Kohl’s, Target, Walmart, Amazon, and other retailers in addition to card companies), car payments, installment payments, living necessities, and an additional ‘cushion’. You have one, don’t you? Who provided the job information? Was it their previous supervisor (preferred) or ‘Cousin Louie’ (not so preferred)? A simple phone call will verify it, so don’t be afraid to punch those buttons. However, don’t ask them to verify how much they make, as that will breach the employers confidentiality with their employee. If you are renting to students, great, but just make sure that the parents are willing to be responsible for the rent as guarantors (I spell-checked that word, so blame Microsoft if it isn’t correct).
  • Lighting may not strike twice, but tenant history just might. If your prospective renter was a bad tenant in the last place they rented, it’s pretty likely they won’t be angels for you either. Then again, maybe there was an understandable reason that they broke their lease, so at this point, you’ll need to put on your detective hat and verify the reason for that black mark. Even if they have a decent rental history, you should contact their previous landlord and politely see if they don’t mind answering a few questions about a previous tenant. (There is kind of a secret ‘brotherhood’ (or ‘sisterhood’) among landlords, so most will be happy to oblige). Ask if they paid rent on time, if they maintained their rental property, if they got along with their neighbors, if they followed the property guidelines for use of the facilities, parking, noise, and more. You might find out they were great and just had to move to be closer to school or work, or then again they might have had bonfires on their patio and rehearsed their metal band on Wednesdays and Fridays.

Rental Property Crime

  • Criminal history … hmm seriously, do you want to take the risk? Again, this is another red flag that will cause you hours to investigate, so you need to decide if it is worth it. Was it a parking violation, marching at a peace rally, or did they murder their last landlord? Often minor violations won’t show up, but you’ll want to know if there were any DUI’s or sex offenses. You have an obligation to help protect your other tenants, so don’t even think about renting to someone with serious convictions.
  • The background check provides other valuable information as well, such as their creditors and credit score. A low credit score is not necessarily a deal killer, but you should know why. Like I said before, life happens. There might be a divorce settlement or medical problems that affect the score, but the ability to pay their rent after expenses should be your primary concern.

Meet and Greet

Landlord and Tenant Meeting

Ok, so now you are cool with the tenant screening part. Let’s get that lease signed! No, wait. You need to first talk to your tenants in person. If the tenant is a student, try to get the parent/guarantors there or at least on speakerphone. That way you can outline the responsibilities of all parties and have a clear understanding of what you expect of all of them. I like to have a separate meeting from the lease signing party because it is more relaxed and you don’t have to go over every provision of the lease in detail. Plus, you have a way to back out if things don’t go well. By that I mean, that you find out something that would be a deal killer, such as a roommate that isn’t confirmed, a problem with the parent guarantee, incorrect move-in or move-out dates, and so on. Plus, it is just fair to give the potential tenant time to go over the lease in detail so that they can ask questions prior to signing the lease with you. At the lease signing, be absolutely sure that you do go over the lease terms and make sure everyone understands it. Be super-friendly but also make it clear that this is a ‘professional’ relationship and you WILL enforce the terms of the lease strictly.  It is a contract, not a guideline, so prepare your tenant for their legal responsibilities. But you don’t get off that easy, you must guarantee to your tenant that you will also enforce YOUR responsibilities, like enforcing their ‘quiet enjoyment’ (keeping the neighbors quiet), fix things that break (your stuff, not their TV or Xbox), and respond to their request promptly. Remember, when you are married, it takes two responsible people to make both happy.

Watch What You Say

One more thing, I have to warn you about some of the things that you CANNOT ask your tenant. There’s this little thing called the Federal Fair Housing Law or your state might have a separate one – it is a big legal no-no to not pay strict attention to it. Here it is in a nutshell – don’t discriminate! Here are some fairly blatant examples of what NOT to ask a tenant:

  • Race – questions like ‘What race are you?’ or ‘Do you want to live with other minorities like you?’
  • Color – ‘You have dark skin, are you Hispanic or Caucasian?’
  • Religion – ‘I am a Buddhist, so I don’t want any Christmas decorations in your apartment’.
  • Sex – ‘I would be glad to have more good-looking women like you here’.
  • National Origin – ‘What is your first language?’ or ‘What country were you born in?’
  • Familial Status – ‘I don’t want my tenants having kids’.
  • Stupid Stuff – ‘A guy and his boyfriend might bother the others’ or ‘Are you divorced?’ or ‘Have you ever been arrested?’ because being ‘arrested’ and ‘convicted’ are very different. Additionally, you cannot only run background checks on select races or genders.

Don’t Be the Bad Guy (or Girl)

Happy Tenants

Now that you have let your tenants know that you will strictly enforce their lease, you can let them know you are not all that bad. There are ways that you can keep your tenant happy and even get them to work on your behalf (remember filling the potholes?).  Here are some ideas on how you can maintain happy tenants and keep that rent money filling up your mattress.

  • Reward your tenants for longevity. No, I don’t mean give preference to the elderly. If they keep your rental property occupied, that is a benefit to you. (Flashback to dealing with security deposits, eviction, legal troubles, and you with a bottle of Jack). For example, you can write a provision in your lease that when they renew their lease, you will give them something special, such as a free carpet cleaning or an interior paint job. This rewards your tenant, and at the same time, it improves your rental property. Another idea (maybe the second year) you could offer to plant some trees or improve the exterior of their rental. Again this is a win-win situation – you get a happy tenant, renewal of your lease, and improve the value of your property at the same time! Each year think of something new that you can do as a longevity reward.
  • Next, think of your tenant as a ‘good will ambassador’ for you. Maybe you can provide a financial bonus off a month’s rent if they bring in another tenant for you. Or maybe that incentive could benefit the new renter instead. Be sure that you can verify that the new tenant isn’t a result of your own marketing, and limit it to one or two tenants to protect yourself from abuse of your incentive. By the way, this incentive might also be something else, such as an upgraded appliance, Internet or networking upgrade, ceiling fan, or decorations. You’ll know what the tenants might want by actually spending some time ‘talking’ with them about what they would like to do to improve their ‘home’. Lack of communication is the main reason for so many divorces!
  • If they are renting your house, maybe you can get them thinking about buying the home by creating monthly credits toward that purchase. This is different from a ‘lease to own’, which is an actual contract where rent payments go towards purchase of a home. The way that it is different is that a ‘credit’ is applied each time they pay rent on time. ‘On time’ is the key here, because this rewards the tenant for not being late. You’ll have to keep a ledger (available to the tenant) with these credit amounts. After a set time, say 5 years, they will be able to use the credit towards the purchase of the house. This helps keep your renter in the home, and gives them a goal to work towards. Not to mention the ‘on time’ clause … if they pay their rent late, the accrued credit goes away…zilch…nada. (I didn’t take Spanish in High School for nothing!) Then it starts over with the next on-time payment. This is just an idea for out-of-the-box thinking, but you’ll need to provide your tenants with the details and make sure everything is good and legal.
  • One of the main reasons for tensions between landlords and tenants are the maintenance requests. This is where your lease is SO important. You only need to fix the things that you include on your lease agreement or those things which involve the health and safety of your tenants. That includes removal of pests (excluding children), locks, fire alarms, neighbors shooting guns, and unhealthy environments (think mold). Of course, things like backed up toilets, dripping faucets, broken ice makers and the like are things that may (or may not be) caused by tenant neglect. Generally you are obligated to fix those types of things, and that will keep your tenants very happy indeed (you hope). However, some tenants are pretty handy around the house, so one way to establish a good relationship is to let them do some minor repairs themselves. Do they do professional painting, plumbing or landscaping? Notice the word ‘professional’. They should be licensed and bonded for any work. But if they are, why not barter for some improvements on your property? Besides rent reduction, you can also wield some of the other incentives mentioned above. Non-professional work could include yard work, handing out flyers (for the non-technical or social media posting for others), installing hanging plants, minor painting or whatever your brilliant mind can conjure up. You’ll need to ok everything in writing and provide the materials in most cases.

Think Out of the Box

Young couple at New Home

These are some things that will help you keep your tenants happy. There are many other things as well, but those fall in the category of ‘amenities’. If you manage an apartment complex, tenants have come to expect an exercise room, laundry facilities, pools, and common areas. But you can always take that one step further by providing a meet-and-greet on a regular basis, movie nights at the pool, or with each new tenant lease agreement signed, send out a ‘welcome’ on social media to the other tenants. Here are more ideas:

  • Consider adding a common area for a dog park. It should be fenced, and separated into a ‘big dog’ area and ‘small dog’ area. If you really want to impress, add an obstacle course for the dogs. Be sure to add a sign upon entry that you are not responsible for anything that happens in that area. You don’t want to have to deal with little fluffy ‘Fi-Fi’ that got eaten by ‘Bruiser’. Draw the line on other pets like pigs, goats, horses, and tigers.
  • Barbecue areas are popular with tenants, maybe with a horseshoe area (not for real horses, see above), rope toss, Bocce ball, or washer toss.
  • Bike racks are a great idea. You tenants will appreciate not having to chain their bike to a tree, stair railing, or having to carrying their bike up 2 flights of stairs. Again be sure to post a ‘not responsible’ sign.
  • We can’t get enough. Consider adding electronic entry, security cameras, online applications, online rent payments, an app to alert when laundry is done, or maybe something shiny that just looks like smart technology.
  • Discount coupons or coupon books are popular. Contact the local businesses and see if they can provide your tenants with a coupon (available at your front desk), and in turn you might get a free meal or membership. Win-win.

Finally, be sure to keep your rental property clean, well maintained and communication open with your tenant. When you do that, you will have the type of tenant that will be loyal, timely, and together you will smooth over those ‘potholes’ in the road you are traveling on. Happy marriage!

 About the author:

Wayne GathrightWayne Gathright is the President of W G Software, Inc., which produces the Tenant File Property Management Software.  The Tenant File is used by over 5,000 landlords, property managers, and owners of rental property. The Tenant File was founded in 1995, and now manages over 200,000 rental units. Wayne has written several books related to property management including ‘What ALL Landlords REALLY Need to KNOW’, and manages a number of other websites related to real estate sales and rentals, tenant management, and rental property.  In his spare time, Wayne is an award winning songwriter in Austin Texas. Visit the Tenant File at: http://www.TenantFile.com.

 

 

How to Handle Bad (Deadbeat) Tenants

Landlord Eviction NoticeIt’s all smiles and anticipation at first. The new tenant looking to start off in a new rental home, and the landlord looking forward to a good tenant that pays rent on time and takes care of the apartment. Then the nightmare begins – late rent, property damage, legal issues, and accusations. That’s the deadbeat tenant.

Some bad tenants are really, really good at it. They know the legal ropes and use them to their full advantage in order to stay in your rental as long as possible without having to pay rent. But there are precautions that you can take before, during and after their stay. Here is some advice for landlords on how to handle the situation.

  1. Don’t rush the application process. Make sure the tenant has completely filled out everything, and that it is accurate. Ask to see their driver’s license and compare the birth dates and identification with what is on the application. The tenant could be using an alias to hide convictions or past rental history.
  1. Be sure to run credit and background checks. Include criminal history, previous rental history, credit history, previous and current debts, sex offender, and more. If their debt is too high, they may not be able to afford your rent. Know how to read everything on the report and what the minimum credit rating should be for your tenant.
  1. Call their family and employment references. You might consider asking if a family member would be willing to guarantee their lease to find out how much they really support the applicant. Be sure to ask a lot of questions.
  1. Realize that you are not their close friend, you are their landlord. While it is always a good idea to be on a good basis with your tenant, you don’t want to be the one they count on to help them in a financial jam – that is where friends and family come in. They need to realize that as a landlord, you will have to evict them for non-payment of rent, although you will hear plenty of sob stories, both true and made up.
  1. Their social media profile may be entirely different from their persona that you see. Check Facebook and Twitter to be sure that they are not using fake names or have a history of drugs or violence.

After they move in, you need to be sure that you protect yourself in case the worst happens.  That includes keeping multiple copies of their lease in a safe place, and documenting every call and issue that happens during their stay. If the rent is late, be sure to promptly send them notice and document any call, email, or note posted at the residence.

Once the legal deadline has passed and you have provided proper notices, you will need to go to your county courthouse, file the eviction notice and pay the fees to have legal notice service by the sheriff or process server. This can be expensive, but it is better than sitting for months without any income. Do not accept partial rent payments from the tenant, because that could start the entire process over again.

The tenant may claim that you did not follow the lease or provide needed repairs, so you really need to make sure that you document everything done throughout the entire stay, especially the move-in and move-out documentation. While you need to be firm in dealing with the tenant, you must also realize that communication should be open and you will need to decide if you will make any concessions at all.

Hopefully you can have a good (professional) relationship with your tenant and everything will work out well. However, planning for the deadbeat tenant may save you a lot of headaches down the road.

Ransomware Attack Affects the World

We have been warning about computer security for a good while now, and it has happened again – BIG TIME. Last week a world-wide ransomware virus was released, and to date it has affected computers in over 150 countries … and still growing.

Ransomware - Tenant File BlogSo what is ‘ransomware’?  It is particularly disturbing because you won’t know until a message appears on your computer screen telling you that your files have already been encrypted. If you look at your files, you’ll see a long number instead of the file name. For a ransom payment (in bitcoins) your data will be un-encrypted. This nasty bug has infected both servers and Internet connected computers, so nobody is really safe. Because of an alert individual in the UK, the US was spared from the initial attack, however, it is very possible that the attackers can make a few adjustments and send out more modified versions that will be even more devastating than the first wave. At the time of this writing, 3 modifications have been released.

This is not a ‘Russian’ attack; in fact, Russia was one of the first to be hit, along with Britain and Japan. The US is only just now compiling the toll, but we know FedEx and a large number of US based business have been on the receiving end. What it ‘does’ show is that the Internet is very vulnerable to cyber attack on a large scale.

So what does this have to do with property managers? The property management business is one of the most likely and vulnerable targets for future attacks. The property managers hold sensitive information on owners, their bank accounts, email addresses, social security numbers and rental properties. They also have information on millions of tenants, their bank accounts, passwords, social security numbers and other confidential information. Most of the web-based property management software companies were rushed to the market within the past 5 years, and I would venture that most of them do not have even moderate protection against an advanced hack attack.

While any computer connected to the Internet is at risk, we think that desktop software is much better protected. You would be smart to even have a computer that is not connected to the Internet in any way, so that you can run desktop based software in the event of a cyber attack or another ransomware attack. It will happen to you eventually, it is just a matter of time, and it could even come in the form of a natural disaster that is man-made or comes via Mother Nature. No matter what kind of property management software you have, be sure to make local backups of your data – don’t count on a stranger’s word that they maintain ‘redundant’ copies of your data. Since the servers are connected, a massive attack is likely to affect all of them. Your best defense is a copy of your data that you can hold in your hand.

At Tenant File, we have already saved a good number of customers that had their data encrypted, by helping them restore their program and backups. We’ve heard horror stories of web-based software customers that lost everything, and had to start from scratch, hunting through file folders to try and re-create their owner and tenant financial history. And they are left wondering if they will be held responsible for the owner and tenant data that is now in a hacker’s hands. We hope you never have to experience that!

Follow These Simple Tips For Handling Late Rent

Unfortunately, late rent is a fact of life. While you would like to think that all of your tenants will pay rent on time every time, this sadly is not always the case. This is not always a huge deal. We all know that “life happens” and rent can sometimes be delayed, even with the most reliable tenants. If this starts to become a frequent issue – one that is causing you countless headaches – then certainly some steps need to be taken to correct the problem. This article will delve into some recommended ways for handling late rent.

 

Have A Policy Set Down In Writing

 

rental policies

 

As with many issues when it comes to leasing out property, it is important to have a policy on late rent written down on the lease agreement itself. For one, this allows you to communicate your expectations to the tenant in no uncertain terms. Secondly, it gives you legal recourse if you feel that you are being taken advantage of. The way you handle late rent is up to you. Perhaps a daily fee will be charged after a certain grace period (say, five days). You want a policy that will not scare off most potential tenants, but that will help ensure that your rent money comes in at the beginning of the month, every month. This is, after all, your income. You deserve to receive it on time!

 

Encourage Your Tenants To Set Up Automatic Payments

 

One great way to cut down on late payments is to set up automatic payments. This is more convenient for you and the tenant. With an auto payment set up, the rent will deduct from the tenant’s account and go straight to yours—no need to deal with checks or money orders. Most importantly, you will not receive a late payment because the tenant forgot that it was the first of the month. It is important to let the tenant know that the money needs to be in their account when the automatic payment is due. If they don’t want to set up auto payments, encourage them to at least set up an online bill pay option. They have to remember to submit the payment every month, but at least you will not have to deal with checks. By purchasing some good landlord software, you can give your tenant the option of using automatic payments/online bill pay.

 

Stick To Your Guns

 

As mentioned before, things happen. Sometimes a tenant will have a legitimate emergency that prevents them from paying the rent on time. If this happens habitually though, it is likely that the tenant is taking advantage of you. This is why it is important to charge the late fees that were agreed upon in the lease. In extreme cases, eviction may even be necessary. An eviction isn’t a pleasant experience for any of the parties involved, but if rent is consistently late, it may be best to start over with a new, more reliable tenant.

A Good Tenant Is Not Hard To Find

If you have been a landlord long enough, chances are you have seen your fair share of bad tenants. You have likely dealt with late rent, domestic disturbances, noise complaints, perhaps even destruction of property. You might even be at your wit’s end, wondering where on earth you are going to find a stable, reliable tenant. Do not lose hope! Good tenants are out there, and with the right knowledge and resources, you can find them. This article will offer some pointers on how to ensure that all of your tenants will be an ideal fit for your property.

 

Use Technology To Your Advantage

 

An important step in this process of finding the ideal tenant is screening potential applicants. In this case, it pays to utilize technology. By installing rental property management software on your computer, you greatly increase the tools in your screening arsenal. Such software allows you to run a credit check, a criminal background check, and previous rental history. Knowing this information upfront alleviates the three major concerns that most landlords have: that the tenant pays their debts (and isn’t bogged down with excess bills), that the tenant is a law-abiding citizen, and that the tenant has not caused any issues at other apartments. If the background check raises any red flags, do not hesitate to move on and keep looking. Don’t settle!

 

Be Deliberate With Your Ad Placement

 

finding good tenants

 

One good way to attract good tenants is to let good tenants know what you are offering them. This is why it is important to get the word out there regarding your property. Promote your amenities, your location, and the great deals that tenants will get by renting your property. To attract the ideal tenants, it is important to be deliberate about where you are placing these ads. Putting up fliers all over town, or using classified sites like Craigslist will likely attract any and all types, including scammers. Try advertising in more exclusive places, like real-estate guides and websites, or lifestyle magazines. Yes, you will spend more money advertising this way, but having stable tenants in all of your units makes the investment pay off.

 

Wait For Your Check To Clear

 

If you have found a tenant who has signed your lease and given you a check, congratulations! You may be tempted to take down your listing at this point. This is not recommended. While it may be tempting to just relax and know your apartment is rented, you should wait for the check to clear first. While we would like to think the best of people, the truth is that checks bounce, issues arise, and the tenant we thought we were getting ends up being way different than what we expected. Take down your listing and remove your advertisements once the money is in your hand. Trust us, this will save you many headaches. If it turns out you are not getting the money that you thought you were, at least you are in prime position to get another tenant.

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